CAIRO: Steel and cement companies charged with following anti-competitive business practices and raising market prices await their destiny amid skepticism of the penalties and actions to be taken against them.
The Antitrust and Competition Protection Commission (ACPC) received on July 16 a request from Minister of Trade and Industry Rachid Mohamed Rachid to study and submit a comprehensive report on the cement and steel markets. The authority submitted the cement market results – which have been handed to the public prosecutor – and will announce their market research results of the steel sector by December.
ACPC announced that if the public prosecutor finds the companies guilty, penalties will range from a minimum fine of LE 30,000 to a maximum of LE 10 million.
“Steel and cement companies make a profit of over 100 percent of their production cost, LE 10 million is a feeble price to pay for such a crime, Ismail Saad, an investment analyst and cement sector expert at Prime Securities told Daily News Egypt.
Egyptian Iron and Steel, Egypt’s third-largest listed steel company, made a net profit of LE 197.22 million for the year ending June 2007, more than 700 percent higher than the previous year. Net profit for the year 2005/2006 stood at LE 23.61 million.
“Egyptian Iron and Steel is only a small example of the profits garnered by such companies, Ezz Group makes billions of Egyptian pounds in profits, it is unreasonable to ask them to pay LE 10 million as a penalty, Saad said.
Experts have been calling for stricter regulations to ensure that companies do not go back to anti-competitive practices after paying these fines.
Rachid said that if these charges were proven to be correct, the penalty would be “severe . However, he did not elaborate on the severity of the measures.
The Ministry of Trade argues that with the increase in production of steel and cement, competition will increase and market prices will stabilize. Seventeen new cement licenses and four steel plants will be granted by the end of the month.
“There is no doubt that the Ministry of Trade has accomplished great achievements in these sectors, moving Egypt from an importer of these commodities to an exporter, Saad said.
Nevertheless, due to the nature of the business – and the hefty start-up capital required – tycoons have been born, who “fear nothing .
“Rachid’s decision is in itself courageous, but the true penalty would be to establish a law that denies businessmen of their licenses if they continue their monopolistic practices, Saad said.
